On 1 January this year, the Budget Law 2025 (Law 30/12/2024 No. 207) came into force.

Among the main innovations on taxation and benefits contained in the law are:

Premium IRES: For 2025 only, a reduction of the IRES rate from 24% to 20% on declared business income is envisaged for companies that fulfil the following conditions:

• allocation to reserves of at least 80% of the profits for the financial year 2024;
• investment of a portion of these earmarked profits (amounting in any case to no less than EUR 20,000) in the purchase, including through leasing, of new 4.0 and 5.0 capital goods;
• new hires of permanent employees with increased employment.

Stabilisation of the revaluation of the tax cost of land and participations (listed and unlisted): Through the payment of the substitute tax, single rate equal to 18%, natural persons, simple companies, non-commercial entities and non-resident entities without permanent establishment in Italy will be allowed to revalue the cost or purchase value of the participations and land owned as of 1 January of each year outside the scope of the business, franking all or part of the capital gains obtained, pursuant to art. 67 co. 1 lett. a) – c-bis) of the TUIR, when the participations or land are sold for consideration.

Revision of IRPEF rates: Reduction of taxable income brackets and IRPEF rates from four to three:

• Up to 28,000 tax rate 23%;
• Over 28,000 euro and up to 50,000 euro rate 35%;
• over 50,000 euro rate 43%.

Introduction of a cap on tax deductions for taxpayers with incomes above EUR 75,000, while providing greater relief for families with more than two dependent children and families with disabled children. Healthcare expenses and those related to mortgages taken out until 31 December 2024 are excluded from the cap on the revised deductions. Investments in start-ups and innovative SMEs are also excluded.

The deduction will be up to a maximum of €14,000 in the income bracket between €75,000 and €100,000, while for the income bracket between €100,000 and €120,000 the maximum deduction will be €8,000. There will also be a stop to deductions for children over 30, with the exception of disabled children, for whom deductions will continue to be granted without age limits

Super-deduction for new hires: An extension is envisaged for 2025, 2026 and 2027 of the super-deduction for new hires of permanent staff under Article 4 of Legislative Decree 216/2023.

For further information on the changes provided for in the Budget Law 2025, DL 19.102024 no. 155 (so-called ‘DL fiscale’ connected to the Budget Law) and DL 27.12.2024 no. 202 (so-called ‘Milleproroghe’ decree), please contact us.